BLOG: Five P2P myths busted

Written by:
Stuart Law of Assetz Capital takes down five common myths about peer-to-peer lending.
BLOG: Five P2P myths busted

You can include P2P loans in your NISA allowance.

Investors could be forgiven for thinking that this is the case – after all, George Osborne announced the change in March – but the actual technical work to make this happen takes time. P2P industry representatives are speaking to the Treasury, and we hope to have a solution in place by the end of the financial year.

Now that the industry is regulated by the FCA, it’s risk-free.

FCA regulation ought to make the P2P lending industry safer for ordinary investors, but as with any financial product, risk is involved investors should take sensible precautions and research products.

P2P lending is for tech-savvy whiz kids.

We have many lenders on our platform who are retired, for example. Depending on the platform you use, P2P lending is very simple, and good platforms will have telephone support available if you do need a little help getting set up.

Defaults are the same as losses.

This is one of the most common misconceptions that we see. An increasing number of P2P lenders (ourselves included) take security on every loan, which means that when a loan defaults, we aim to use that security to get our lenders’ money back. When choosing a platform, investors should also look at loss rates, as good platforms that take security should expect to recover the majority of defaulted loans – our expected loss rate for the £43m of loans we’ve issued to date is just 0.12 per cent.

If you lend money via P2P platforms, that money is locked in for a fixed period

Although some P2P products do ask you to commit funds for a fixed period (this is made explicitly clear), the majority of P2P platforms allow investors to sell on their loan parts as long as the loan is in good standing. Some platforms charge a fee for this; we don’t – this means that, as long as there are other investors willing to buy your loan parts, you can withdraw your money whenever you want, without penalty.

To learn more about P2P lending click here.

Stuart Law is CEO at Assetz Capital.

Related Posts

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week